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A.M. Best Removes From Under Review With Developing Implications and Affirms Credit Ratings of Jackson National Life Insurance Company and Its Affiliates

Business Wire

OLDWICK, N.J.--(BUSINESS WIRE)-- A.M. Besthas removed from under review with developing implications and affirmed the Financial Strength Rating of A+ (Superior) and the Long-Term Issuer Credit Ratings (Long-Term ICR) of “aa-” of Jackson National Life Insurance Company (JNL), its wholly owned subsidiary, Jackson National Life Insurance Company of New York, and its direct parent, Brooke Life Insurance Company (collectively referred to as the Jackson National Group (JNG). Additionally, A.M. Best has removed from under review with developing implications and affirmed the Long-Term Issue Credit Ratings (Long-Term IR) of “aa-” on the notes issued under JNL’s funding agreement-backed securities programs and the Long-Term IR of “a” on JNL’s existing surplus notes. A.M. Best also has assigned a number of Long-Term IRs to securities issued under one of the existing funding agreement-backed securities programs. The outlook assigned to these Credit Ratings (ratings) is stable. All companies above are headquartered in Lansing, MI. (Please see below for a detailed listing of the Long-Term IRs.)

The ratings were placed under review in March 2018, following the public announcement by JNG’s parent, Prudential plc (Prudential) [NYSE: PUK], that it intends to demerge its U.K. and Europe business from Prudential, resulting in two separately traded companies.

The rating affirmations reflect JNG’s balance sheet strength, which A.M. Best categorizes as adequate, as well as its strong operating performance, favorable business profile and very strong enterprise risk management.

The rating affirmations also reflect the strength and support provided by Prudential. A.M. Best recognizes the planned de-merger of JNG’s parent and believes that Prudential will continue to maintain the resources to provide a similar level of support, as needed, under the proposed new structure. JNG’s year-end 2017 risk-adjusted capitalization is considered to be marginally adequate, resulting from a decline in total capital at year end related to tax reform. A.M. Best notes that surplus has increased materially through the first half of 2018, and A.M. Best anticipates an improvement in JNG’s risk-adjusted capitalization as of the current year-end. The balance sheet assessment also reflects the company’s somewhat conservative invested asset allocation and overall favorable liquidity metrics. A.M. Best views JNG’s financial flexibility as enhanced by the strength of the group’s parent, Prudential, which has historically provided financial support as needed.

JNL’s market leading position in its core variable annuity (VA) line and its extensive and diverse distribution capabilities are the drivers behind the company’s favorable business profile. However, A.M. Best notes that JNG’s liability profile is less diversified than many of its peer companies, due to its concentration in the VA market. The company benefits from the strength of its overall risk culture and governance, with extensive board involvement and risk committee structure. The organization employs a multi-year economic capital model and has strong asset/liability management capabilities in place. Operating metrics remain favorable despite a decline in sales relative to several years ago, driven by regulatory and competitive pressures within the annuity markets. Through the first half of 2018, statutory premiums were modestly lower than 2017, and pre-tax operating gains were favorable but somewhat lower than the prior year.